Should you quit, or wait to be fired?

November 6, 2017, 9:30 am

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Some investment banks are cutting back headcount or transferring roles outside of financial centers such as New York and London, and if you feel that the tap on the shoulder is inevitable or extremely likely, should you quit before you’re pushed out? The downside, of course, is that you could lose out on severance payments, but you could also get ahead of the competition before an anticipated slew of layoffs.

1. Start looking early

The recommendation of most career coaches and recruiters is to hang in there – if possible. Keeping the job, albeit only temporarily, has many upsides.

The best thing to do when you see the writing on the wall is to start looking for a new job, says Janet Raiffa, an investment banking career coach, the former head of campus recruiting at Goldman Sachs and a former associate director of the Career Management Center at Columbia Business School.

“You won’t necessarily be able to secure one, but it is always easier to find a job when you have a job,” she said. “It also may take a long time between first contact and interview and receiving an offer, so you could start the process while you’re still employed and then accept an offer after you’ve been terminated.

“I’ve definitely met lucky people who have been fired or laid off after they’ve already secured a new job, and then enjoyed severance and a smooth transition.”

2. Try to get a push package

Consider the circumstances surrounding your pending departure, according to Maggie Mistal, executive coach and the founder of MMM Career Consulting.

If you suspect you’ll be laid-off, then it might make sense to leave and negotiate for a transition package.

“I had a client whose employer announced cutbacks,” Mistal said. “They wanted to move on anyway and proactively offered to leave – with a package of course. It was a win-win. My client got transition money and free time to move onto the career he really wanted, and his boss didn’t have to be the bad guy and let someone go.”

3. Update your resume and quantify your achievements

Everyone should have an up-to-date resume ready to send out at the drop of a hat. List the great things you’ve done and quantify the results, said Connie Thanasoulis-Cerrachio, career coach and partner at SixFigureStart.

“Just in case you are blindsided and you are out of a job, why waste time up front getting your marketing materials ready?” she said.

4. Don’t leap if you don’t have to

Ask yourself a key question: Are you prepared financially to go without work for six months or a year?

Raiffa definitely does not recommend quitting before you have another job just to be able to say you have left voluntarily. These days, there isn’t as much stigma to losing a job, and on Wall Street it’s quite common for people to be displaced multiple time.

“It’s almost a badge of honor, and can be framed positively in terms of ability to retool and recover,” Raiffa said. “If there aren’t other job opportunities you can jump to, you’ll need unemployment benefits, even though the maximum benefit of $425 won’t seem like much to a highly paid professional.”

5. If you’re at the bottom of the pile, look for something new

If you suspect you’ll be fired for underperforming, then you might want to resign to protect your reputation. In addition, if you’re so miserable that it’s taking a toll on you mentally or it’s affecting your health, then you might want to quit to protect your health.

“I had a client who was hired to take on work from someone else who was overwhelmed,” Mistal said. “Trouble was, the person was so overwhelmed he never had time to train my client.

“Unfortunately my client got blamed for not performing so rather than wait to be fired, she proactively resigned,” she said. “This way, her reputation wasn’t damaged by being fired and she was still able to reconnect with the other job opportunities she’d been pursuing before taking this role.”

One concern to keep in mind, though, is that simply quitting will raise even more suspicion than getting fired, according to Roy Cohen, career coach and author of The Wall Street Professional’s Survival Guide. It’s a matter of perception. You don’t want to get labeled a quitter.

“We live and work in a world where employees get fired routinely,” Cohen said. “It is easy enough to explain, even if the situation is messy, but to just leave implies the potential to be a prima donna, impulsive and maybe even a little reckless.

“Remember, you are walking away from unemployment benefits,” he said. “Ultimately, these impressions suggest that the problem is more likely the quitter – not necessarily the situation.”

6. Get the best severance package

If you’ve been at a job a while, it’s frequently possible to negotiate severance, and packages can be generous, Raiffa said.

“Too few people try to negotiate severance, and most companies are amenable to it to ease the transition,” she said. “Keep in mind that when doing background or reference checks, most companies can only provide dates of employment and not give out details on termination or performance, so there is no need to quit for fear of a future employer finding out that you’ve lost a job involuntarily.”
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Morning Coffee: The two year course that can still land you a job paying $200k. Weird job interview reminiscences

November 6, 2017, 2:57 pm

≫ Next: What to expect for your private equity salary, bonus and carried interest in the U.S., Europe and Asia

≪ Previous: Should you quit, or wait to be fired?

Investment banks aren’t supposed to be as interested in hiring MBAs now as they used to be. If the latest employment figures from Harvard Business School are anything to go by, they’re not. However, other types of financial services employer have picked up the baton.

Poets and Quants reports that a mere 5% of Harvard’s graduating MBAs went into investment banks this year. However, 31% went into the financial services industry in total – up from 28% last year.

If Harvard MBAs aren’t going into M&A, what are they doing? Try venture capital, private equity and other buyout funds, which together accounted for 18% of the graduating glass. Hedge funds accounted for a further 6%.. And miscellaneous finance activities made up the remainder.

What makes finance so appealing at Harvard given its general uncoolness? It might just be the money. Poets and Quants points out that the MBAs who went into hedge funds and investment managers earned the highest median pay packages of nearly $200k. VC and private equity funds paid the ex-students a median of $175k.

By comparison, the tech industry paid them a median of $130k and coincidentally the percentage of Harvard MBAs going into tech firms was at its lowest level for five years. Similarly, start-ups proved less popular with Harvard MBAs this year than last. Has the tech hiring bubble burst? Or are heavily indebted Harvard students simply going for money first of all?

Separately, if you interview with Vanguard it may be weird. Financial News spoke to departing chief executive and (Wharton) MBA Bill McNabb who says it was certainly weird when he interviewed there. “In classic Vanguard style I had 20 to 25 interviews to get my first job and for the last interview I ended up in Mr Bogle’s [the founder’s] office. He looked at my résumé, looked at me and said: ‘You’re a pretty ambitious young fella aren’t you, so I don’t know why you’ve come here,” recalled McNabb. He then went home and told his wife he’d had the “strangest interview,” but took the job anyway.

Meanwhile:

Reasons to work for a European bank on Wall Street. i) They still want to hire you. ii) They will pay you 30% more. (Bloomberg)

MiFID II hiring panic is upon us. There are four times as many MiFID II jobs at the end of October this year than last. (Financial Times)

One London law firm is so desperate to secure space in Frankfurt that it signed an office lease five years before the office is even finished. (Bloomberg)

Greenhill says it doesn’t have a problem with retention, so how come 44% of its MDs left in the last five years? (Gadfly)

Goldman Sachs won’t be trading options on exchanges in the US any more. (Fox)

Blockchain energy trading platform is here. (Reuters)

Freaky Swiss intelligence consultant Jean-Charles Brisard, has seemingly been posing as a Wall Street reporter to extract money from short sellers. Could this be a job for you? (Wall Street Journal)

The difference between narcissism and high self esteem. (Scientific American)

If you’re not accepted at work, you’re twice as likely to die. (BBC)

If someone’s rude to you in the morning, you’ll notice people being rude to you all day long. (BPS)

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What to expect for your private equity salary, bonus and carried interest in the U.S., Europe and Asia

November 7, 2017, 1:39 am

≫ Next: Credit hiring continues as Deutsche recruits from Moore, Nomura from Citi

≪ Previous: Morning Coffee: The two year course that can still land you a job paying $200k. Weird job interview reminiscences

Private equity is still the place to be for junior investment bankers. The private equity salary, bonus and (importantly) the big bucks you can earn through carried interest is all part of the buy-side’s appeal, but the perceived better hours and more varied work also helps sway sell-side analysts and associates across.

But how much do you really earn? And if you want to make big money in private equity, where in the world should you base yourself? The figures below, provided to us by research firm Preqin, give you an idea of what to expect. They show base private equity salary and total compensation – the discrepancy being down to bonuses, and carried interest. When you’re senior in PE, carried interest is where the big money is.

Carried interest is generally only a big deal once you reach the senior ranks in a private equity fund. In the U.S, however, ‘carry’ hits private equity professionals’ wallets before director level. Preqin’s figures suggest that even associates and senior associates in the States received an average of $66.2k and $145.9k respectively in carried interest. This isn’t bad, particularly when it’s added on to respective total cash compensation of $157.3k and $198.4k.

Wherever you are in the world, carried interest accounts for the lion’s share of pay when you reach the senior ranks. Managing directors in the U.S. received an average of $1.5m in carry alone last year; chief executives of PE funds received $5m. Managing directors in Europe received an average of nearly $1.6m in carried interest and CEOs pulled in over $2.4m.

Total compensation for private equity professionals is higher in the U.S. than anywhere else across all levels of seniority. Plenty of bankers want to move into private equity in Asia, tand the region now holds its own when it comes to pay. Preqin’s figures suggest that the most you will earn on average in Asia is $2.7m, at CEO level. This is lower than an equivalent role CEO role in Europe or Asia, but Preqin’s figures show that salaries and bonuses for the lower ranks in Asia are now close to their European peers. Preqin’s figures didn’t include carry at most levels in Asia due to insufficient data.

Finally, private equity firms are still hiring. 61% of firms surveyed by Preqin said they were hiring – 31% said they would keep headcount flat and just 8% said they would reduce employee numbers. The largest proportion of firms hiring (26%) said they intended to increase headcount by 6-10%.

Demand for junior private equity staff is higher than any other rank. Private equity firms are reportedly targeting investment banks’ juniors after just six months’ sell-side experience. It’s easy to see why – 40% of people Preqin surveyed said analyst and associate roles were the most difficult to fill, while 30% said that mid-level roles (VP and senior associate) were most in demand.

Private equity salary, bonus and caried interest by region and rank

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Credit hiring continues as Deutsche recruits from Moore, Nomura from Citi

November 7, 2017, 5:19 am

≫ Next: How Credit Suisse is changing who it hires because of artificial intelligence

≪ Previous: What to expect for your private equity salary, bonus and carried interest in the U.S., Europe and Asia

Credit trading businesses didn’t have a great third quarter. Most banks don’t break out their credit trading revenues, but at those that do, credit trading desks had a hard three months: at Barclays, credit trading revenues were down 22% year-on-year in the third quarter; at HSBC, credit trading revenues were down 15%. On this basis, the three months to October don’t look like a great backdrop for hiring, but hiring in credit is happening all the same.

Deutsche Bank’s just picked up Rebecca Klausen, a credit trader who previously spent seven and a half years at shrinking hedge fund Moore Capital. Klausen joined this month as a Central Eastern Europe Middle East and Africa (CEEMEA) strategist in the London office. Last month, Deutsche also bolstered its U.S. credit strategy team with Dominic Gurney, a director level hire who previously spent over 13 years at Goldman Sachs.

Nomura is continuing to build its credit business too. And ever since it appointed former Citi veteran Wissam Farah as head of EMEA global market sales in October 2016, Citi has been Nomura’s preferred poaching ground. In July, Nomura appointed Fred Jallot, the former head of EMEA trading and structuring at Citi as its EMEA head of global markets. Now, we understand that it’s also picked up Omar Ghalloudi, the former head of investment grade credit trading at Citi, who left the bank in August. Frederic Giovansili, Citi’s former head of French markets, is also understood to be setting up a new credit trading desk for Nomura in Paris.

“There’s a late wave of hiring in credit,” says Russell Clarke, founding partner of Figtree Search in London. “On one hand, you have banks with spaces to fill. On the other, you have traders who are afraid they won’t be paid. It’s creating a lot of liquidity in the market.”

Nomura and Deutsche aren’t the only ones recruiting. Standard Chartered is also recruiting under Roberto Hoornweg, its head of financial markets who was hired from Brevan Howard last December. Goldman Sachs has made credit hiring a priority after mistakenly cutting 30% of its credit sales and trading headcount between 2012 and 2017 and Citi has plenty of Nomura-inspired gaps to fill. – It’s recently understood to have hired Paras Shah, a former high yield credit trader from HSBC, for example.

In any normal year, banks might wait until bonuses have been paid in the first quarter to poach from rivals. But headhunters say this isn’t a normal year. “You have banks that are trying to rebuild and banks that are trying to reinvigorate their risk taking,” says one, speaking off the record. “It’s a perfect storm,” says another. “The credit business is likely to normalize next year as the ECB tapers, and credit talent relative to desk strength is likely to be cheaper this year than next. Banks are trying to upgrade while they can, and traders are trying to position themselves now for the market in 2018.”

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How Credit Suisse is changing who it hires because of artificial intelligence

November 7, 2017, 7:07 am

≫ Next: I have a comfy life at J.P. Morgan’s CIB working around 35 hours a week

≪ Previous: Credit hiring continues as Deutsche recruits from Moore, Nomura from Citi

The surge in demand for data science specialists seems a little like putting old wine in a new bottle. After all, both buy-side firms and investment banks have long used structured datasets to inform their investment decisions, so why the sudden surge in demand for seemingly unobtainable talent?

In a nutshell, artificial intelligence and machine learning are changing everything.

“On the sell side, applications of AI include everything from client acquisition and research to trading to operations to controls and compliance,” said Nikhil Singhvi, the global head of market and client connectivity at Credit Suisse at the Tabb Group Fintech Festival in New York last week. “Each of these has different use cases and different levels of adoption.”

When it comes to using AI for investment decisions, investment banks now have a disadvantage, he says. Bulge brackets used to be able to bet their own money through large prop trading desks, which also served as an in-house guinea pig for trying out new ideas. Regulatory crackdowns on banks’ prop trading desks after the financial crisis means this is no longer an option.

“With a lot of prop trading going away from the sell side, you have to do more and more testing, whereas in the olden days, when there were prop traders sitting beside you, you could work with them to test the strategies,” he said. “Now you have to do many simulations before people are comfortable and you can put it into production, and there are cost pressures.”

More to the point, Credit Suisse is changing the type of people it needs to hire, he said.

“We’ve changed our thinking from a regular stat-based quant to machine learning, which is a big change, and the challenge of finding [and hiring candidates with] the right skill set is a big issue.”

While unstructured data is increasingly in demand, Credit Suisse typically partners with providers who convert data sets from unstructured to structured, rather than bring people in-house to do such tasks.

“From a company’s perspective, how do we want to use this data, and what are the use cases? You still need to be able to make sense of it and read where the signals are pointing,” Singhvi said. “The capacity to be able to build the model – that’s where you need a lot of that data.

“If you don’t have the [cognitive-computing] hardware, then it is difficult to achieve within the bank’s infrastructure,” he said. “You have to push the boundaries with your infrastructure and architecture teams. It requires a combination of the public cloud and a private cloud and a continuous push within the organization to make it happen.”

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I have a comfy life at J.P. Morgan’s CIB working around 35 hours a week

November 7, 2017, 7:26 am

≫ Next: The real lure at European banks on Wall Street: the massive salaries

≪ Previous: How Credit Suisse is changing who it hires because of artificial intelligence

I’m writing this for everyone at J.P. Morgan in London and New York City. I’d just like to say that I work for J.P. Morgan too and life is good. I don’t do your hours and I’m not badly paid.

I’m a developer in the Glasgow office. You may even know me: I’ve worked on products that have been rolled out across J.P. globally; I’ve been on plenty of calls.

J.P. Morgan in Glasgow is a comfy kind of place. I’ve seen what things are like in Canary Wharf. Here in Glasgow, life is a lot less stressful.

Working for J.P. Morgan in Glasgow is like working for a tech firm. There are no business functions up here and there are no teams aligned to demanding trading desks. We get to work at our own pace. The environment and the culture are less finance and more tech.

Banks are known for working people hard – even in technology, but the hours at J.P. in Glasgow are short. My contract only stipulates a 35 hour working week. Admittedly, I often do a bit more than that – but not that much more. There’s not the expectation that you’re going to work super long hours here. Sometimes I work a bit longer if I want to make progress, sometimes I go home early to catch a delivery or go to the gym. No one really checks up on me – it’s up to us to manager ourselves, as long as we’re productive it’s fine.

Of course, there are caveats. I’m paid less than in London. Just look at Glassdoor – it’ll tell you that the average software developer’s salary here is £34k ($45k). In London, it’s £60k. But then you can rent an amazing apartment in a good area of Glasgow for a fraction of the cost in London, so your money goes a lot further.

J.P. Morgan’s Glasgow office is also a big place. There are more than a thousand people working here. It could just be that I’m lucky: other teams might be less comfortable places to work. – But I don’t think so.

The real issue with J.P.M. in Glasgow, though, is promotion. Promotional prospects are ok here until you hit vice president (VP) level. Once you’re a VP, you’re pretty much stuck. It’s very difficult to get any higher than VP if you’re in the Glasgow office. If you want to make MD, you need to move to London. And this is where your problems will begin. The quality of developers in London seems to be much higher than in Glasgow and people there are used to a different pace of work. Most of the top developers here eventually transfer to London, but it can be hard to make it work.

Even so, Glasgow has been good for me. I wanted work life balance and I’ve had it. I expect to move to London eventually – who doesn’t? Until then, I’m just enjoying the pace of life.

Matthew Brown is the pseudonym of a developer in J.P. Morgan’s Glasgow office. This subjective piece reflects his opinion and is not a representation of the opinion of eFinancialCareers.

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The real lure at European banks on Wall Street: the massive salaries

November 7, 2017, 10:09 am

≫ Next: Morning Coffee: How to infiltrate Bridgewater’s “circle of trust”. The new upside to equity research

≪ Previous: I have a comfy life at J.P. Morgan’s CIB working around 35 hours a week

European banks are hiring feverishly on Wall Street. McKinsey & Co is reportedly advising Deutsche Bank CEO John Cryan that the U.S. is the market to conquer. Barclays is busy pursuing its aim of becoming the preeminent transatlantic bank. Credit Suisse just got itself a head of U.S. equities trading from UBS and BNP Paribas has hired a new head of global markets institutional sales for the Americas. Hiring is on, and the Europeans are not holding back.

Bloomberg reported yesterday that European banks are luring Wall Street talent with hefty pay packages beyond those on offer at rival U.S. firms. “They’re playing catch-up,” said Jason Kennedy, CEO of Kennedy Group in London. Mike Karp CEO of the Options Group, said the Europeans are offering guaranteed bonus packages that make their total compensation 30% higher than U.S. rivals’.

However, other headhunters in NYC say the focus on bonuses and guaranteed compensation misses the point: what differentiates European Union-based banks on Wall Street isn’t the guaranteed bonuses but the salaries. The salaries are huge.

Huge salaries are said by headhunters to be particularly in evidence at Deutsche Bank’s U.S. operation. Deutsche Bank first hiked salaries in its investment bank in 2014. It hiked them again for juniors in 2015. And it hiked them again under John Cryan in January 2016. The increases applied to all regulated staff, which at Deutsche Bank now means everyone above vice president (VP) level.

As a result, Wall Street headhunters say Deutsche Bank’s salaries are now considerably out of kilter with the rest. “If Bank of America Merrill Lynch is hiring a managing director on $2m total comp, they’ll pay a salary of $450k plus a bonus of $1.55m,” says one headhunter with DB as a client. “At Deutsche Bank the salary will be $700k and the maximum bonus will be twice that at $1.4m.”

The cause of the discrepancy is the European Union’s bonus cap, introduced in January 2014. The cap forbids banks from paying bonuses greater than twice salaries for all regulated staff. Despite banks’ efforts to prevent the rules applying outside the EU, they also extend to their operations in the U.S. and on Wall Street.

Deutsche isn’t the only bank afflicted by the cap: Barclays, BNP Paribas and SocGen are under it too. However, headhunters say Barclays’ salaries are less out of line than Deutsche’s, possibly because the bank opted to pay large role-related allowances instead of increasing salaries when the bonus rules were introduced. Meanwhile, the EU has banned its banks from paying ‘hard’ guaranteed bonuses (but permits guarantees which are linked to targets and are a range instead of a hard figure) in all but exceptional circumstances. Deutsche – for example – only paid guarantees to 25 people last year.

Deutsche’s enormous salaries risk causing a headache if its Wall Street revenues don’t increase quickly. While U.S. banks are still operating a variable pay model, Deutsche is ramping up fixed costs every time it recruits. This is an issue given that Deutsche’s investment bank already has one of the highest cost ratios in the sector. With compensation typically eating up 40% or less of revenues at banks now, the BAML trader in the example above needs to generate $1.2m to cover his or her compensation costs. The trader at Deutsche needs to generate $1.8m.

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Morning Coffee: How to infiltrate Bridgewater’s “circle of trust”. The new upside to equity research

November 7, 2017, 2:46 pm

≫ Next: Why this ex-Morgan Stanley commodities chief is tapping bankers for the “Goldman Sachs of P2P”

≪ Previous: The real lure at European banks on Wall Street: the massive salaries

If you’ve ever wondered what the downside is to earning big bucks at a hedge fund, look no further than non-compete agreements. Imagine signing up to a job only to be told that a condition of your continued employment is saying ‘no problem’ to the prospect of staying away from working for a competitor for two years after you decide to leave your current company.

Non-competes are ubiquitous among senior investment professionals on the buy-side. Citadel ties some staff into two-year non-competes, while Brevan Howard star trader Chris Rokos contested a five-year non-compete deal in order to launch his own hedge fund, Rokos Capital Management, in 2015. Bridgewater Associates, the world’s biggest hedge fund, goes one step further.

Greg Jensen, the former co-chief executive of the firm, current co-chief investment officer and long-time protege of Bridgewater founder Ray Dalio, has not had a good day. The WSJ has published details of an alleged groping incident at the firm involving Jensen and a reported $1m settlement with a female employee of the firm he had a consensual relationship with. Putting these aside for a moment, the Journal article also highlights another important detail – the necessary sacrifices to be accepted into the ‘inner circle’ at Bridgewater.

Jensen joined Bridgewater as an intern after graduating from Dartmouth College in 1996. Since moving up the ranks, he has, according to the WSJ, signed a non-compete agreement for his entire life. The upside? Jensen has been accepted into the “circle of trust” – yes, like Meet the Parents – a select group comprising around 12 employees who are given full knowledge of Bridgewater’s investment process. Still, should Jensen decide to leave, it’s unlikely he’ll be found wanting – aside from a long period of gardening leave, he has made $1.7bn in compensation over the past five years, according to estimates from researcher Institutional Investor’s Alpha.

Separately, while MiFID II doesn’t have many fans in investment banks, there’s one potential benefit to unbundling the costs of equity research from other trading charges – that research will get better if clients are paying directly for it, and the role of the analyst will gain some integrity again. Philip Augar, former City worker and a historian of London’s financial district, writes in the FT that the regulation will make equity research teams smaller, but “could complete the post-Spitzer rehabilitation of sellside research as a reputable occupation”. Research will be driven by market forces, which means it has to add value to those paying for it, rather than serve the interests of the companies the analysts are writing about. “All of this has the potential to restore prestige and status to a profession that long ago lost integrity and a clear sense of purpose,” he wrote.

Meanwhile:

Screen Shot 2017-11-07 at 14.06.11

Deutsche Bank isn’t just hiring for its trading floor. It’s also brought in 24 managing directors and directors within leveraged finance. (Bloomberg)

Meet Stephanie Cohen, the new person implementing Goldman Sachs’ $5bn plan to bolster its investment bank (WSJ)

Goldman Sachs had zero days in the third quarter where its trading team made more than $100m. This is a problem (Gadfly)

Craig Broderick. Goldman’s chief risk officer who worked at the bank for 32 years, is retiring (Reuters)

Forget the rhetoric – investment banks are saying in private that the lack of progress on Brexit will force thousands of jobs out of London (Financial Times)

Inside the slick new hedge fund offices designed to target techies (WSJ)

The perils of being a whistleblower (Financial Times)

Don’t believe everything you read about Brexit and banking jobs (CityAM)

Innovate Finance, the fintech lobby group set up by former UK chancellor George Osbourne, has been leaking staff (Financial News)

European cities are targeting lucrative corporate legal work from London (Bloomberg)

British people are happier after Brexit (Bloomberg)

The secret to dealing with manipulative colleagues (HBR)

Why the email prankster is calling it a day (Buzzfeed)

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Why this ex-Morgan Stanley commodities chief is tapping bankers for the “Goldman Sachs of P2P”

November 8, 2017, 2:38 am

≫ Next: Firing (and hiring) plans by bank in the final months of 2017

≪ Previous: Morning Coffee: How to infiltrate Bridgewater’s “circle of trust”. The new upside to equity research

If you’re a senior banker or hedge fund manager looking for a place to invest your spare cash, Yann Murciano, the former head of base metals trading at Morgan Stanley, believes he can help out.

Since leaving Morgan Stanley last year, Murciano has quietly been running Blend Network, a fintech start-up and peer-to-peer lender that he says – ambitiously and as a slight to his former employer – he wants to turn into the “Goldman Sachs of P2P”.

On the face of it, as a P2P lender, the Blend Network is not an original idea for a fintech firm. It lends money to companies and individuals who are struggling for finance from traditional bank lenders, at a rate of 8-15%, from a pool of investors. But around two-thirds of the people lending the money are City workers.

“We have a lot of bankers and hedge fund guys lending on our platform. It’s rare in the current climate that you can find an investment with low volatility that returns more than 10%,” says Murciano.

Murciano was head of base metals trading at Morgan Stanley until his exit in June last year. He worked at the firm for ten years, having joined in 2006 from ABN Amro where he traded FX options. He is one of a number of senior Morgan Stanley commodities staff to leave over the past 18 months as the bank retreated from the asset class. Others include Amrik Sandhu, its EMEA head of commodities, who left to found his own commodities trading and advisory firm, InsideOut Advisors and Peter Sherk, the former co-head of commodities at Morgan Stanley, who is now CEO for North America at energy trader Mercuria.

“As a trader, I started out in FX options then moved to precious metals which was a less mature market at the time. A lot of FX traders did the same move. Precious metals options became more mature, I then moved to base metals. I was always looking for less efficient markets. I believe they offer more opportunities to traders,” says Murciano.

“This was ten years, ago, and commodities is clearly not a safe place to be. Right now, I believe that fintech is the new bull market.”

Murciano says that thing that sets Blend Network apart from other P2P lenders is his extensive investment experience and the fact that he has a wealth of City contacts willing to invest their money. He also has Ivor Freedman, a 76-year-old former retail banker, on board to who do the more “boring” side of organising loans. The firm employs seven people.

Murciano says the biggest adjustment has been the change of pace. “When you work on the trading floor, you’re used to people responding to your emails within two minutes. Working for a start-up in the retail space is a bit of a culture shock.”

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Firing (and hiring) plans by bank in the final months of 2017

November 8, 2017, 4:37 am

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As the nights get longer and the days get shorter and bonuses loom into view like a giant pile of restricted stock on the horizon, banks have a tendency to stop hiring and to start firing. Will this year be any different? As we reported yesterday, there’s still plenty of recruitment on credit trading desks. Is this a sign that 2017 is bucking the trend?

No.

Banks still have firing plans this year. Between now and January any hiring is likely to be minimal, but can’t be ruled out all together – when you have strategic roles to fill, it can make sense to bring people in before the post-bonus hiring rush in the new year.

Bank by bank, here’s what to expect in the dog days of 2017 and the start of next year.

Bank of America: Massive spending on (and likely hiring in) technology. Needs to get rid of some more traders

Bank of America’s investment bankers working on M&A and capital markets deals have been doing well this year. Its salespeople and traders have not.

In the call accompanying BofA’s third quarter results, CEO Brian Moynihan boasted that the bank has cut costs equivalent to the entire “cost structure” of Merrill Lynch since it acquired the Merrill in 2008. As BofA invests in technology, including artificial intelligence, it’s working to keep costs stable. Across the bank, BofA spent a huge $2.5bn on technology this year. CFO Paul Donofrio noted that savings which have been made in the banking (IBD) division have been offset by technology investments, and that BofA has been upgrading rather than making net new headcount additions.

Bank of America laid off around ten traders in September 2017. However, it could benefit from making more cuts to its markets division, where costs were 77% of revenues in the first nine months of this year, versus 65% in global banking and around 60% across the bank as a whole. Neither Moynihan nor Donofrio gave any indication that cuts are coming, however.

Barclays: No redundancies planned, ongoing hiring across technology and sales and trading (especially cash equities and electronic)

Barclays has been one of this year’s biggest hirers. In the ten months to October, it recruited 21 managing directors, two thirds of whom went into the markets division. Tim Throsby’s presentation in September suggests it hasn’t stopped hiring yet.

Throsby said Barclays wants to “restore excellence” in electronic trading, to “regain a leading position” in FX and rates, and to pursue “targeted growth” in equities, prime services and credit. The implication is that Barclays could hire further in all these areas, although it may not do so this year. In the call accompanying the bank’s third quarter results, CEO Jes Staley also said Barclays has been over-reliant on flow equity derivatives, whilst neglecting cash equities and that it intends to remedy this. Separately, Staley said that Barclays has “under-invested” in technology and will make amends for this too.

While Barclays is hiring, it says it won’t be firing. Despite a cost ratio of 74% in its investment bank in the third quarter (up from 68% a year earlier), it insists restructuring is over. “You cannot cut yourself to glory and those that try will ultimately fail,” said Staley. Instead of cutting heads, Barclays is cutting bonuses.

BNP Paribas: Still pursuing ~5% compound annual revenue growth in its global markets business. Has a further €100m of costs to take out of its corporate and investment bank before the end of the year

BNP Paribas has been hiring in 2017. The French bank has a 5% annual growth target for its global markets business between now and 2020 and has been recruiting in fixed income. Most recently, it recruited Deutsche Bank’s former head of inflation trading. It’s also added in credit and emerging markets.

BNP’s new recruits look more like upgrades than net headcount additions, however. Whilst bringing new people in, it has also been letting existing people go, the most recent exit being Simon Birch, the former head of emerging markets fixed income trading, who left last month.

For a bank that prides itself on its cost efficiency, BNP’s global markets division is starting to look a bit flabby. In the third quarter, costs rose to 77% of revenues, up from 71% a year earlier.

Fortunately, therefore, BNP is in the process of a cost cutting programme. In its third quarter presentation, it said it has around €200m of costs to cut before the year is over, half of which are likely to be extracted from the investment bank. Fixed income traders should probably be worried.

Credit Suisse: Continued cost squeeze focused on contractors. Equities hiring is over, but hiring (seemingly) continues in compliance

Credit Suisse wants to keep costs in its global markets division below CHF4.8bn this year – a reduction of 11% on 2016 and 45% (yes!) on 2015. It’s on track to do this. In the first nine months of the year, global markets costs were CHF3.7bn, implying that Credit Suisse can spend CHF1.1bn in Q4 2017, down only slightly on the CHF1.3bn it spent during the same period last year.

Despite cutting costs viciously, Credit Suisse has been expanding headcount. In October 2017 it had 80 more people in global markets than in October 2016, and 350 more people in the investment banking division. It also had 750 more people across all business in Asia Pacific.

How can CS cut costs and hire? Simple: its cost cutting focus is contractors and consultants. In the year to October, 3,050 contractors and consultants were let go. As one Credit Suisse contractor pointed out this week, this is causing consternation among contractors still at the bank, who claim it’s cutting too deeply and that working there has become a misery.

While Credit Suisse is cutting contractors, its hires in global markets have been particularly focused on equities, where it’s been hiring heavily from UBS. However, in last week’s analyst call CEO Tidjane Thiam said the bank’s equities hiring is over and that CS is now waiting for revenues to come through in the next 18 to 24 months.

Separately, Thiam said Credit Suisse has been hiring for a new “compliance lab” which houses 18 PhDs and 54 people with masters qualifications. This appears to be the new, new thing at CS, and hiring there may well continue.

Citi: Gaps to fill in credit trading, still building in equities. No mention of cost cutting

Citi’s institutional clients group (its investment bank) has had an exceptional year and outperformed all its rivals. The bank has spent the last few years bolstering its equities trading business and in Citi’s third quarter investor call CFO John Gerspach said he was pleased with its progress and with the 30% combined revenue uplift between equities trading and equity capital markets compared to the previous year. Unlike Thiam at Credit Suisse, however, Gerspach didn’t say equities hiring at Citi is now over.

Gerspach also didn’t say that Citi is hiring in credit. However, as we reported yesterday, Citi has gaps to fill because its senior credit traders are defecting to Nomura.

There was no mention of cost cutting in the bank’s third quarter presentation, even though Citi said previously that it wants to shave 70 basis points off expenses in the investment bank by moving staff to low cost locations. At 67% of revenues in the first nine months of the year, costs in Citi’s institutional clients group were some of the lowest in the market.

Deutsche Bank: Cuts likely in support functions. Hiring likely in the U.S.

Deutsche Bank has a cost problem. In the third quarter of 2017, costs ate 87% of revenues in its investment bank, up from 74% a year earlier. And things threaten to get worse.

As Deutsche CFO James Von Moltke pointed out in the bank’s third quarter call, Deutsche has committed to actually paying bonuses this year, meaning that compensation costs will rise in the fourth quarter compared to 2016 (when it didn’t).

Naturally, there is a way around this, and that is to cut heads and pay those who remain. This is almost certainly what Deutsche will do. The bank already says it’s made cuts from its fixed income sales and trading staff and CEO John Cryan said today that Deutsche employs far too many people. Deutsche’s overall headcount of 97,000 could be halved by technology, said Cryan, adding that the bank has too many people in back office functions compared to front office functions. Following earlier suggestions by Cryan that Deutsche employs a lot of accountants who are performing the tasks of an abacus, the implication is that Deutsche is going to do something harsh with people working in support roles. This is unlikely to happen before Christmas. however.

While Deutsche is culling its middle and back office staff and replacing them with automated systems, it’s likely to add front office staff in the U.S. Cryan has reportedly called in McKinsey & Co. to help him turn the bank around and McKinsey and Co. say conquering the U.S. market will solve all Deutsche’s problems.

Goldman Sachs: Hiring ‘coverage and distribution staff’. Quietly culling some U.S. equity derivatives traders

Goldman Sachs has got big expansion plans. Outlined by COO Harvey Schwartz in September, these plans involve chasing $5bn+ in revenues over the next three years, split between fixed income currencies and commodities ($1bn+), lending and financing and Marcus ($2bn), investment banking and coverage ($0.5bn) investment management ($1bn) and equities ($0.5bn).

To this end, the firm is hiring. Most importantly, it’s hiring “laterally” as it brings in experienced people from rival banks. In the bank’s third quarter call, CFO Harvey Schwartz said Goldman has doubled its lateral hiring this year compared to last and that the hires are weighted to “sales distribution” after the bank said it wanted to increase its penetration of corporate clients. Many of Goldman’s hires have been at executive director and managing director level. After culling 30% of its credit sales and trading professionals between 2012 and 2017, Goldman has a particular need to hire in flow credit.

As Goldman goes for growth, no mention was made of cost cutting. This doesn’t mean it’s not happening. Fox Business reported this week that the bank is quietly pulling out of listed equity derivatives trading in the U.S.

J.P. Morgan: No mention of hiring, no mention of firing, but firing would be beneficial. Machine learning specialists welcome

Cost cutting is supposed to be over at J.P. Morgan. Investment bank CEO Daniel Pinto said as much earlier this year.

However, J.P. Morgan’s sales and trading business didn’t do well in the third quarter and the bank may well be tempted to take costs out before December – particularly as CFO Marianne Lake warned that fourth quarter sales and trading revenues are also likely to be down on last year.

J.P. Morgan is working hard to automate as much of its investment bank as possible. The bank as a whole already spends $9.5bn on technology and one of Pinto’s insiders is David Hudson, the head of markets execution who says the bank has done too much to protect employees in the past. Last month, Pinto promoted Samik Chandarana, a former credit trader and J.P. Morgan veteran, to the role of developing the bank’s data and machine learning strategies. This follows the success of David Fellah, a member of J.P. Morgan’s European equity quant research team, who developed LOXM, J.P. Morgan’s new self-teaching trading algorithm, which can execute large and complex equities trades.

Morgan Stanley: Investment in technology. No cuts planned

Morgan Stanley has no need of making cuts to its ‘institutional business.’ CEO James Gorman says the bank’s 72% efficiency ratio is below its 74% target and that its “project streamline” expense savings are coming to fruition.

Morgan Stanley hasn’t been a big hirer this year. However, Gorman suggested things may have been happening behind the scenes. Morgan Stanley is “driving electronic transformation” in its investment bank, said Gorman and building a platform that will last for the next decade. Expect technology hiring then.

UBS: No cuts coming. Ominous things have been said about automation and hiring in technology

UBS has also finished cutting heads in its investment bank for the moment. Andrea Orcel said as much earlier this year and UBS added 81 people in its investment bank (many of whom are likely to have been recent graduates) in the third quarter. of 2017. In the same period, costs consumed 85% of revenues in the investment bank, down from 91% a year earlier.

Even so, UBS could potentially benefit from taking some more costs out of its investment bank, where its cost ratio remains high relative to rivals.

Ultimately, this is likely to happen through automation. UBS CEO Sergio Ermotti has said that 30% of jobs at the bank could go in the next decade due to automation. Another UBS executive told Bloomberg it’s more like 40% in as little as four years.

Accordingly, UBS used its third quarter presentation to say that it has increased its spending on regulation and technology in the investment bank by 8% in the past year. As at other banks, technologists and compliance professionals (especially technologists working on compliance technology) are the people of the moment.

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Ex-Barclays non-core MD joins former colleagues at restructuring boutique

November 8, 2017, 6:09 am

≫ Next: What to do now if you want a new job when your bonus lands

≪ Previous: Firing (and hiring) plans by bank in the final months of 2017

A former managing director within Barclays non-core investment bank signed up to a boutique that advises financial services on how to sell divisions that are not central to their business.

Giles Godfrey, the former head of non-traded assets within Barclays non-core unit, has joined Palio Financial alongside two other former big-hitting bankers. He is a senior advisor to the firm, according to his public profile, and joins founders Peter Meijer, a former J.P. Morgan banker who left his MD role at Moelis & Company to start the company last November, and ex-Barclays managing director Geoff Smailes.

Palio Financial was set up to advise financial institutions on the disposal of non-core assets and other strategic work, according to an interview with Meijer on Financial News last year. Meijer has a background in restructuring, having worked on portfolio disposals and other restructuring work at Moelis, while Smailes was head of global markets structuring and legacy credit asset trading at Barclays when he left in 2015.

Godfrey joined Barclays in 2008 as a credit trader and left his role in September last year. Barclays non-core unit was a massive undertaking established in 2014 to remove $110bn worth of risk weighted assets from its balance sheet – or around 25% of the total at the time. The bulk (£90bn) were set to be stripped out of the investment bank in areas including non-standard FICC derivatives and some commodities and emerging-markets products.

Godfrey and Smailes have worked together both during their time at Barclays, and at Solent Capital, a hedge fund set up by Smailes where Godfrey worked as a credit trader for four years.

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What to do now if you want a new job when your bonus lands

November 8, 2017, 6:23 am

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Don’t assume because few people move jobs at the end of the year that now is the time to sit pretty where you are. In fact, the tail end of 2017 is the perfect time to start looking for a new role, particularly if you want to leave shortly after the bonus check hits in January or February.

“Historically, on average a role takes six-to-eight weeks to fill from the time that it’s open and posted to the time that the person joins, so if you start a search now you might not actually start working there until February or March anyway,” says Laura Mazzullo, the founder of recruitment firm East Side Staffing.

Now is the time to start looking. What can you do?

Update and edit your resume now

Get your resume in shape. “Update your resume now – don’t wait until January – and make sure someone in your trusted network edits it,” Mazzullo says. “A second set of eyes always helps.”

The same goes for your social-media profiles.

“Make sure your profile reflects the position you hope to get, and make sure your profile pic is a great photograph, because people will dismiss you so quickly if they don’t see a professional headshot,” she says. “Start connecting to people who are working at the organizations you’d like to work at, then see what contacts you have in common.”

Look internally first

Are you sure you want to leave your current firm? There’s a chance that you can earn a promotion or transfer internally to a role, desk or group that is a better fit for you.

“The grass isn’t always greener – maybe it’s working in a different division or another office or for a different person,” says Kim Ann Curtin, the founder of the Wall Street Coach. “It might be easier to transition to a new role within a company you’ve already been accepted to – maybe go for a promotion or lateral move to a more interesting role rather than look to jump to another firm.”

Get out there and find the right company and role for you

Research helps you to identify what companies offer the job and work environment that you’re looking for. Research target firms’ social media pages and websites, attend association meetings, and ask friends and family who they know in the field and companies that interest you.

“Do informational interviews and dig deeper into what a typical day is like, what they like and don’t like about the job and company and what it takes to be successful,” says Maggie Mistal, executive coach at MMM Career Consulting. “You’ll know there’s a match or not and whether it’s worthwhile to pursue a job.

“Research also helps you build your referral base,” she says. “Most jobs are still landed by who you know, so whether you want to stay in your field or change into a new industry, you’re going to need contacts to get there.

Use the holiday season for networking, but be useful

Make an effort to be more open to connecting with other people, setting up coffee meetings and introductory phone calls. In addition, you shouldn’t be afraid to send introductory emails and social-media messages.

“It doesn’t have to be for a specific job, but it’s good to get your name out there a little bit,” Mazzullo says. “Don’t just ask for favors right off the bat – send an introductory message or email, talk about industry trends, share an article that’s interesting or comment on something they’ve posted rather than immediately asking for a job or a favor, because some people may feel that it’s a little too aggressive or presumptuous.

“There are a lot of industry events – including specific banking or PE networking functions, conferences and holiday parties – happening around the holidays, so it’s a good time to get out show your face and meet people,” she says.

Get out from behind your desk and network with others in the areas and companies you think you’d like to work in. Look to your university alumni association and attend charity events in person.

“I suggest making a goal of doing one to two informational interviews a week while you’re preparing for your job search,” Mistal says. “Reach out to old contacts and find out how they’re doing.
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Photo credit: AscentXmedia/GettyImages
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“Sexual harassment is horrific in the financial recruitment industry”

November 8, 2017, 7:07 am

≫ Next: The big problem with DIY quants

≪ Previous: What to do now if you want a new job when your bonus lands

Hollywood had its Harvey Weinstein moment. Banking had its BNP Paribas moment. Now it seems that financial recruitment firms need to have a moment of their own: women in the recruitment industry say harassment and sexism is endemic and that almost nothing is being done about it.

“I hear what women say about the sexism on trading desks and I think, ‘That’s nothing,'” says one senior female finance recruiter in London, speaking on condition of anonymity. “In recruitment it’s 10,000 times worse. The sexism and harassment in financial services recruitment is horrific.”

The flashpoint in recruitment firms is Thursday nights. Thursday nights are drinking nights, and are when male directors will often take more junior female staff on office trips to bars and clubs. “In my team we continuously had a problem with one of the male directors on Thursdays,” says the finance recruiter. “Every time we hired a new pretty junior member of staff he’d be all over her. I had to make sure I went along to defend her and if I didn’t, something would almost always happen. I had quite a few young women leave as a result.”

She says the firm, which is well-established in London, would hire young female recruiters purely on the basis of their looks (“I’d hear them talking among themselves after the interview and they’d be discussing the interviewee’s chest”) and that senior managers would send firm-wide emails about the women who’d hooked up with male employees on Thursday nights.

She herself has now left the company, but says the director with a reputation for harassing women is still firmly in place. “Recruitment firms don’t have the kinds of checks that banks have, and they often hire very young people. You get these 24 year-old men managing teams and making money and they get huge egos and create very sexist cultures.”

In defense of recruitment firms, the (male) head of another leading financial services recruiter in the City says he fired a consultant for harassing his young female staff last year: “We had someone who was being very predatory with our younger women, taking them to strip clubs and just being generally unacceptable.” However, he too agrees that harassment is endemic in financial services recruitment: “I know of two senior people with a reputation for this and both have been in the industry for a long time and their behaviour has had no consequence.”

Recruiters are more likely to harass recruiters rather than other candidates. The senior female recruiter we spoke to said the best way to avoid it is to bypass the Thursday night drinking session, to have zero tolerance for any unwanted advances, and to be a big biller: “These men can’t handle it when you bring in more than they do.”

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The big problem with DIY quants

November 8, 2017, 8:20 am

≫ Next: Morning Coffee: How you’ll know you’re too old to make MD at Goldman Sachs. Elite students urged to adopt banking lifestyle

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This year, quants are the new rock stars of finance. Hedge funds, asset managers and investment banks are all rolling out the red carpet for those who can write algorithms that will ensure they get ahead of the competition as Wall Street restructures itself around a brave new world of artificial intelligence, quantum computing and huge reams of structured third-party data to make investment decisions.

As a talent crisis looms, there’s also a new generation of firms – such as Quantopian, Numerai, Quantiacs – convinced that there’s really not a shortage of quants, they’d just rather create algos at home in their pajamas than within the confines of an investment bank or hedge fund. These funds use the carrot of Darwinian competition with the chance of a monetary prize at the end or, in the case of Numerai, its own currency.

Quantopian hired Jonathan Larkin as its chief investment officer in June last year to lead a ‘community’ of data scientists, mathematicians and quants, shortly before it announced that hedge fund grandee and Point72 Asset Management founder, Steve Cohen, was investing $250m and that it had plans to manage external capital and launch its own hedge fund based around its best freelance members. Larkin has now departed, with reports suggesting that it was down to disappointing performance within Quantopian’s $50m hedge fund, which launched this summer.

There’s a bigger issue here. Maybe, the idea of a ‘crowdsourced’ hedge fund open to any DIY quant willing to work for comparative peanuts isn’t a fundamental threat to the highly-paid professionals after all.

“These types of platforms can often be more about quantity over quality,” says Alexander Lipton, a PhD who has held senior quant roles at Bank of America Merrill Lynch, Citadel and Credit Suisse. “These days, anyone can take an online course and call themselves a data scientist. Hiring quants for a large financial institution is a rigorous and complicated process – and rightly so.”

Lipton was head co-head of the global quantitative group at Bank of America Merrill Lynch, overseeing a team of 200 quants across New York, London, Tokyo, Hong Kong and Sydney and was heavily involved with recruitment. “It was a complicated process. Usually, we required a very strong technical background, preferably a PhD from a top school and then we’d take them through a gruelling interview process to ensure they were up to the job. You have to draw a distinction between the general public who claim to be quants versus the people with the relevant skills and qualifications.”

The interview process at investment banks has come under criticism from quants themselves. Gruelling nine-hour modelling tests and up to 10 rounds of interviews are reportedly the norm. Assuming you make it through this, if someone at the top has any doubts, the hire is not signed off. Jamie Walton, the former head of FX quants at Morgan Stanley, told us previously that it received 700 quant applications every year, and hired 10-20 of them. Any new recruit need 100% approval rates from those involved in the process.

Naturally, those running these companies believe in the rigour of their own selection process. Quantopian founder John Fawcett told the FT that “we have conviction in our investment process and expect our refinements will lead to improved results”.

Larkin told us previously that the 15 people Quantopian selected from 120,000 members to manage capital underwent a selection process to rival any hedge fund or investment bank. Quantopian vets the algorithms, and makes sure the code can run successfully on its own for six months. Then it goes into an automated screening process and, finally, is monitored by the firm’s own quant team. Anyone who makes it through this is then subjected to a background test and then an interview with the team.

The successful quants were not amateurs, he said, but ranged from quants studying computer science at Cornell, to senior data scientists working for internet companies, to mechanical engineers. “From our vantage point, we see a lot of people with the types of skills that would be welcomed in a lot of industries, particularly finance, but that don’t necessarily want to be tied down to one sector,” said Larkin. “To some extent, it’s reflective of the evolution of work – people want to move around.”

Lipton has since quit large financial institutions and now describes himself as an entrepreneur. He is involved with numerous projects – he’s just signed up as a senior adviser to blockchain start-up Zilliqa, as well as OTC derivatives settlement tech firm Clearmatics. He’s an adjunct professor at New York Stern University, a technology fellow at MIT and a visiting professor at the Oxford-Man Institute of Quantitative Finance.

While he believes that quants are entering a new golden age with the opportunity to work on exciting projects around blockchain, artificial intelligence and data science, financial services is no longer the natural home for the top quants, he says.

“When I started in the 1990s, any quant who was a little entrepreneurial went into an investment bank. It was the ideal place to be – interesting work, at the forefront of financial engineering,” he says. “Now, finance is more sedate and there are a lot more opportunities available elsewhere.”

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Morning Coffee: How you’ll know you’re too old to make MD at Goldman Sachs. Elite students urged to adopt banking lifestyle

November 8, 2017, 11:51 pm

≫ Next: Upset in Paris as U.S. style layoffs come to small French bank

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Are you too old to make managing director at Goldman Sachs? If you’re much beyond 45, the answer is probably yes. It may even be yes if you’re much beyond 35.

Goldman Sachs released its new MD list yesterday. Aside from being the largest such list ever (more on this below) it also offers some handy demographic pointers about the nature of managing directors (MDs) at Goldman Sachs.

Basically, Goldman MDs are young. On average, each new MD on the list has spent 10 years at the firm. If you start at Goldman when you’re 25, the implication is that you’ll be MD in your mid-30s. The earlier the better.

Like last time, Goldman also promoted a large chunk of Millennials (aged between 20 and 36). 44% of this year’s new MDs were in this category, up from a third the last time Goldman made MD promotions in 2013.

None of this should come as a surprise. The average age at Goldman Sachs is 28: youthful promotions are an inevitability.

Meanwhile, Goldman’s giant MD class, which is skewed towards trading, has a message of its own: that Goldman has promoted so many people suggests it’s working hard to retain them after a difficult year. If you’re not increasing bonuses, what better way to keep people on your side?

(Other stats to know about the new MD class: 43% have at least one advanced degree, while 66% started as analysts or associates at Goldman, the bank’s entry-level positions, and 21% are former Goldman Sachs interns – 20% have worked in multiple regions, while 47% have worked in multiple divisions. In investment banking, 101 people were promoted to MD, up from 97 in 2015. In the securities division, which includes sales and trading, 130 people were promoted, compared with 102 in 2015. Eight people were promoted in the consumer and commercial bank, when in 2015 no one was promoted. In technology, the total number was 52, up from 38 two years ago. The percentage of women promoted to MD declined to 24% this year from 25% in 2015. Staff based in the Americas accounted for 57%, up from 54% two years ago….)

Separately, it’s well-known that the Ivy League and Oxbridge are extremely competitive and stressful, but it’s widely assumed that most elite students are self-motivated to go the extra mile. It doesn’t help when professors encourage impressionable minds to go overboard on studying to the point that they don’t have any time for socializing or drinking.

A Cambridge University professor has been accused of “frightening impressionable undergraduates” after he sent an email to first-year students warning them that they would have to give up their social lives if they wanted to do well on the course, according to the International Business Times.

In an email to first-year natural sciences students at Queens’ College, Professor Eugene Terentjev wrote that the course required their “full brain capacity” and would leave them little time for a “social life” and “drinking.”

“Physical sciences is a VERY hard subject, which will require ALL of your attention and your FULL brain capacity (and for a large fraction of you, even that will not be quite enough),” he wrote in the email, which a student shared on the Memebridge Facebook page.

“You can ONLY do well (ie achieve your potential, which rightly or wrongly several people here assumed you have) if you are completely focused, and learn to enjoy the course. People who just TAKE the course, but enjoy their social life, can easily survive in many subjects — but not in this one,” Terentjev warned the students.

“Remember that you are NOT at any other uni, where students do drink a lot and do have what they regard as a ‘good time’ — and you are NOT on a course, as some Cambridge courses sadly are, where such a behaviour pattern is possible or acceptable,” the email concluded.

The message sparked outrage among students, academics and mental health campaigners who warned that Terentjev’s comments could be “extremely damaging” to the mental well-being of students concerned.

Anthony Seldon, vice-chancellor of Buckingham University and a prominent mental health campaigner, criticized Terentjev for “frightening impressionable undergraduates into believing that work alone is all-important”, describing his message as “irresponsible, unkind and wrong-headed.”

Meanwhile:

Goldman Sachs has got a new management structure in its trading business. (Bloomberg)

Jamie Dimon had a personal meeting with the British government and feels better about Brexit now. (Financial Times)

A Harvard Business School case study on the Goldman’s digital strategy, which runs through some of the history of the bank’s efforts to switch to thinking like a tech company, some of the tension it has caused and the payoffs, was presented as part of the executive MBA program last week. (Business Insider)

Some fintech startups want to become banks, too. (Bloomberg)

How a woman from a non-target university landed an equity sales internship and a full-time offer at a bulge-bracket bank in New York. (Mergers & Inquisitions)

Credit Suisse made a big e-trading hire. (Financial News)

UBS has made some big changes to management at its investment bank. (Wall Street Journal)

Jonathan Larkin, the chief investment officer of crowd-sourced quantitative investment algorithm platform Quantopian, has left the firm following disappointing returns in its inaugural hedge fund. (FINalternatives)

A small band of trading specialists are taking calls about $50m bitcoin trades. (Business Insider)

If you’re a trader or portfolio manager shorting a stock, then be sure you don’t the mistakes that these short-sellers just did. (Business Insider)

Venezuela has turned into bond traders’ worst nightmare. (Bloomberg)

Former Cheyne Capital senior portfolio manager Dietmar Schmitt is relaunching his hedge fund business, Sam Capital Partners, with a 10-person team of investment professionals. (HFMWeek)

Bumble, a dating app known for letting women initiate contact with men, now allows its more than 22m registered users to search for prospective mentors and colleagues, in addition to romantic interests. (WSJ)
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Upset in Paris as U.S. style layoffs come to small French bank

November 9, 2017, 3:48 am

≫ Next: Morgan Stanley analyst quits for hot tech firm tackling huge real world problems

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Exane Derivatives in Paris is a small place. Exane as a whole only employs 935 people according to figures on its website. A tiny fraction of those work for the French derivatives operation. In the circumstances, a continued drip, drip of layoffs is raising eyebrows internally.

As we reported last month, it’s not normal to make large scale redundancies in France. When SocGen wanted to let go of 500 people in its corporate and investment bank, it was forced to give them generous voluntary redundancy packages. BNP Paribas, too, has often opted for voluntary redundancies in its “simple and efficient” cost cutting programme.

Exane Derivatives, however, appears to be bucking the trend. Insiders say it keeps laying people off. Quietly, slowly, a few every month so that no one will notice.

Last month’s big exit was Stéphane Bettane, the managing partner of the derivative business. This month’s is said to be Hedda Benguerah, the head of marketing. Insiders say a senior strategist, a convertible salesperson and several support staff are leaving too.

Exane didn’t respond to a request to comment. Benguerah didn’t confirm her exit, but was not there when we called.

The exits, which are becoming a monthly occurrence, are at odds with the norms of French finance employment. “This is a small place and we’re starting to think that four or five people will go every few weeks,” says one insider. “They’re doing it like this so that they don’t have to deal with collective redundancy legislation,” he adds. French collective redundancy regulations apply only to instances where ten or more people are let go at one time.

In opting for a continuous drip of gradual layoffs, Exane is emulating U.S. banks like Goldman Sachs. Headhunters in London say the U.S. bank has a tendency to dribble staff out below the radar rather than making large headline-grabbing layoffs. Exane seems to have decided to do much the same.

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Photo credit: I love Paris in the springtime by Jonathan Ooi is licensed under CC BY 2.0.

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Morgan Stanley analyst quits for hot tech firm tackling huge real world problems

November 9, 2017, 3:48 am

≫ Next: Is this the worst place to work for Goldman Sachs? Or the best?

≪ Previous: Upset in Paris as U.S. style layoffs come to small French bank

MiFID II comes into force in January next year, and if you’re a not a star equity research analyst in the senior ranks, it’s likely to bring in a new era of precarious employment prospects.

Analysts have, of course, been looking for new pastures – whether that’s a comparatively safe home on the buy-side, or investor relations.

Laura Ashworth, an equity research associate focused on the software industry at Morgan Stanley, has taken a different route – joining a hot new technology company developing huge virtual simulations to solve massive real-world problems.

Ashworth joined Improbable, which creates virtual world using cloud computing of “unprecedented scale and complexity”, as a strategy analyst late last month after more than three years in equity research.

Improbable, which is based in the UK, received $502m in funding from Japan’s Softbank in May, which it will use for hiring and developing technology. The firm has big ambitions. SoftBank managing director Deep Nishar said at the time of the investment that Improbable’s technology “will help us explore disease, improve cities, understand economies and solve complex problems on a previously unimaginable scale”.

Improbable also has a history of hiring from investment banks. Its head of corporate, Aleksandra Laska, previously worked for Goldman Sachs’ markets business, while its chief operating officer, Peter Lipka, was formerly an analyst within its technology team and James East who works in Improbable’s enterprise division joined from the U.S. bank in August last year.

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Photo: Getty Images

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Is this the worst place to work for Goldman Sachs? Or the best?

November 9, 2017, 7:15 am

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Goldman Sachs’ Bangalore business is quite the place. Between 2004 and April 2017, it went from 400 to 5,000 people. Since April, it’s seemingly added another 1,000. Ultimately, it could have up to 9,000 people on a new $250m “campus” site due to open in 2019. While Google has the Googleplex, Goldman will soon have a large leafy area on Bangalore’s ring road.

Goldman president David Solomon is all for the firm’s expansionary Indian operation. In a recent throaty podcast posted on Goldman’s own site, Solomon said India has plenty going for it: 50% of the population is 25 years or younger and the Indian government needs to create “10 million jobs a year” simply to keep them all busy. India is already growing faster than China, said Solomon, and the lack of Indian investment in infrastructure creates a huge potential for “outside capital” to make improvements. Ultimately, Solomon said he’s more optimistic about the business opportunity for Goldman’s clients in India than he is for their opportunity in China.

This is saying something, given that China has long been hailed as the holy grail for banks’ expansion globally. It also explains why Solomon says Goldman now houses 6,000 people in Bangalore, and why Goldman is currently advertising at least 100 more roles there – not all of them in technology and the so-called “Federation” (back office), but in its investment banking division and front office “strats” teams too.

However, there’s a cloud over this Indian idyll. And that cloud is promotions. Getting promoted in Bangalore isn’t easy.

The issue is illustrated by Goldman’s latest list of managing director (MD) promotions. While 17% of the firm’s 35,800 employees are now based in Bangalore, just 2% of the new MD class came from the Bangalore office. Nor are things getting better: 4% of Goldman’s new MDs were in India in 2015. If you’re in Bangalore, the trend is moving in the wrong direction.

The resulting frustration is in evidence on Glassdoor’s site devoted to Goldman’s Bangalore employees. Alongside the standard Goldman-related complaints about working hours, there are people there bemoaning the lack of promotional opportunities and the tendency to hire-in new graduates and pay them more than experienced hires. One analyst in Bangalore specifically decries what he claims is Goldman’s tendency to demote experienced analysts with two years experience to “analyst 0” if they move into front office roles, possibly in London or New York.

Even so, and despite the near-impossibility of getting a sniff at MD jobs in Bangalore, morale in India generally seems good. Employees at Goldman’s Bangalore office give it 3.9 stars overall on Glassdoor – the same as their peers give London and New York, and one anonymous Bangalore employee credits management with being, “awesome”.

Anyone looking for the most miserable office at Goldman, might therefore instead want to cast their eyes to Warsaw, where Goldman is busily building another low-cost hub in Europe. Although, 25% of the people Goldman promoted this year are in Europe, none of them appear to be in Warsaw, despite Goldman having had an office there since 2011 and already employing hundreds of people in Poland. On Glassdoor, Goldman’s Warsaw office only has three employee reviews. One claims senior staff there are out for themselves. Another says it’s hard to make money and “grow”.

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“I work in the Paris office of a top US bank. It’s completely different here”

November 9, 2017, 8:55 am

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≪ Previous: Is this the worst place to work for Goldman Sachs? Or the best?

I work in the investment banking division (IBD) of the Paris office of a major U.S. bank. Yes, I am French. No, I am not here because of Brexit. And yes, I am here by choice.

If you’re thinking of moving to Paris, there are some things you need to know. I have worked in Paris and London, so I am well placed to tell them to you. I have seen how the two cities work.

Firstly, you need to know that Paris is small. The U.S. bank I work for here has thousands of staff in London, but hardly anyone in Paris. Every year it recruits around three analysts in Paris. Today, we have seven analysts, seven or eight associates and around eight vice presidents. There are around six managing directors. There are two senior advisors. This is all.

Secondly, because of the small size of the office, the people in Paris are all-rounders. We can each do everything. We can originate and execute deals. We work across sectors. Yes, we work with the sector teams in London, but this is usually only at a senior level (we might get the London MD or VP helping with a pitch, for example). Sometimes, we work with the financing (ECM and DCM) teams in London too. We are powerhouses who operate across the spectrum.

This second reason is why I am based in Paris. It is a professional choice to be here: the work is more fulfilling. I also believe that working in Paris is better for my long term career prospects and my exit options. By being in France I am expanding my network at French corporates. This will make it easier for me to move into corporate development when I move out of banking.

I have personal reasons for being here too. I am French and I am a patriot: I want to cover French companies in France. I find it more satisfying to work on a project involving a French company I have known forever than a random Czech company I’ve never heard of. This is why I left London. I also have friends and family here. I am speaking in my first language. I do not have the discontinuity you get when you build a life in London.

If you move to Paris, then, you need to know that this is not a second tier office filled with second tier people. This is a small office, but the people here are exceptional. We are all people who would be in the top tier of analysts in London. We are highly capable and we are proud. We work harder than our colleagues in London and we work better. If you work in a bank, you need to know that Paris is completely different to London: London is second rate.

Matthieu Genou is the pseudonym of an analyst at a U.S. bank in Paris.

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Photo credit: Still life with a pigeon by Stefano Corso is licensed under CC BY 2.0.

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Morning Coffee: The bank which employed too many jerks. Bankers’ wives speak up

November 9, 2017, 11:40 pm

≫ Next: RBS’s mountain man has just made a switch to the buy-side

≪ Previous: “I work in the Paris office of a top US bank. It’s completely different here”

Once upon a time, under Bob Diamond, Barclays was known for a policy of excluding jerks from getting jobs at the bank. Through a process of exhaustive interviewing, anyone with disagreeable personality traits was identified and directed to the rejection pile. This might be why Barclays is sometimes known as a comparatively pleasant place to work for even now. Under Anshu Jain and his predecessors, however, Deutsche Bank appears to adopted the opposite tack.

In a long article about Deutsche’s origins and the situation in which it currently finds itself, the Financial Times says that in the 1990s and 2000s Deutsche set out to employ people who wanted to make money, no matter what. “Deutsche always hired mercenaries into the investment bank,” one former senior executive tells the FT, “They didn’t care about ethics.” Nor did it help that Deutsche historically encouraged internal politicking by often placing two people into the same role and pitching them against one another, or that Edson Mitchell, founder of the investment bank, had “Wild West attitudes” to risk taking, or that Deutsche’s U.S. business was built on the acquisition of Banker’s Trust, which came with its own set of nefarious goings-on after staff there were caught shifting dormant customer money into the bank’s own accounts.

This, suggests the FT, is both the bank and the set of bankers that current CEO John Cryan has inherited at Deutsche. While Cryan himself is “dry-witted,” “plain-speaking,” “cultured” and “parsimonious”, legacy Deutsche staff – especially those who’ve worked for the bank for over a decade, are likely to be the exact opposite. It’s Cryan’s job to get these leopards to change their spots. Good luck to him. Mitchell’s ethos was that, “If you don’t have $100m by the time you’re 40, you’re a failure.” With that attitude baked into the DNA of Deutsche’s investment bank, Cryan faces an uphill task.

Separately, spare a thought for anyone married to a (male) banker. Following claims two years ago that bankers were awarding “wife bonuses”, Quartz has a piece by a sociologist who’s spoken to wealthy women, many of whom are married to men who work in finance. These women complain about negative perceptions and the supposition that they’re undeserving. Many have college degrees and feel they’re wasting their talents. Their husbands hold all the money and all the power and they’re forced to conceal their use of paid childcare. One, who used to be a banker herself, says: ““[I’m] well-educated. I had a career. You know, where is all that now?…There are power dynamics, where he’s the breadwinner now, and I’m really not. And yet, I do so many things for the family that you can’t put a number on it.”

Meanwhile:

Javier Oficialdegui, a longstanding friend and colleague of Andrea Orcel, will now be running UBS’s investment bank in EMEA. (Financial News)

Fresh from cutting 100 staff, fund manager Janus Henderson is now ready to meet its cost target. (Financial News)

A French fund manager in Dublin is offering voluntary redundancy packages. (Bloomberg)

Contract roles in the City of London are actually up 23% year-on-year. (CityAm)

Citi is dabbling in its very own cryptocurrency: “Citicoin.” (Seeking Alpha)

Natixis, queen of exotic trading. (Bloomberg)

Gary Cohn tacitly reveales that he slept through years of Goldman Sachs media training. (Dealbreaker)

Low status males find women particularly threatening. High status males don’t. (PlosOne)

Flight diverted after wife uses sleeping husband’s finger to unlock phone, flies into a rage when she finds he’s been having an affair. (Guardian)

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1. Start looking early

2. Try to get a push package

3. Update your resume and quantify your achievements

4. Don’t leap if you don’t have to

5. If you’re at the bottom of the pile, look for something new

6. Get the best severance package

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Bank of America: Massive spending on (and likely hiring in) technology. Needs to get rid of some more traders

Barclays: No redundancies planned, ongoing hiring across technology and sales and trading (especially cash equities and electronic)

BNP Paribas: Still pursuing ~5% compound annual revenue growth in its global markets business. Has a further €100m of costs to take out of its corporate and investment bank before the end of the year

Credit Suisse: Continued cost squeeze focused on contractors. Equities hiring is over, but hiring (seemingly) continues in compliance

Citi: Gaps to fill in credit trading, still building in equities. No mention of cost cutting

Deutsche Bank: Cuts likely in support functions. Hiring likely in the U.S.

Goldman Sachs: Hiring ‘coverage and distribution staff’. Quietly culling some U.S. equity derivatives traders

J.P. Morgan: No mention of hiring, no mention of firing, but firing would be beneficial. Machine learning specialists welcome

Morgan Stanley: Investment in technology. No cuts planned

UBS: No cuts coming. Ominous things have been said about automation and hiring in technology

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